Novo Nordisk Stock Plunges 18% in a Week: What Should Investors Do?

NVO Stock Performance - NVO stock has underperformed the industry, sector, and S&P 500, with shares plunging 39.6% in the past six months compared to the industry's decline of 17.7% [5] - The stock is currently trading below both its 50 and 200-day moving averages [5] - NVO shares dropped 17.9% in a week due to poorer-than-expected efficacy data from a late-stage study of its obesity candidate, CagriSema [15] Semaglutide Products and Growth - Semaglutide-based medicines, including Wegovy and Ozempic, are key drivers of NVO's growth [2][6] - Wegovy's label has been expanded in the US and EU to reduce heart risks in obese/overweight adults, boosting sales [3] - The company is exploring additional uses for semaglutide, including heart failure in diabetes/obesity patients and chronic kidney disease [7][31] - A late-stage study of oral semaglutide (Rybelsus) met its primary endpoint for preventing heart problems in T2D patients [3] Competition and Market Position - Eli Lilly's Zepbound (tirzepatide) outperformed NVO's Wegovy in a weight-loss study (25% vs 22.7% weight loss) [11][23] - Lilly's tirzepatide products were removed from the FDA's drug shortage list, while NVO's Ozempic and Wegovy remain on the list [23] - Companies like Amgen and Viking Therapeutics are developing GLP-1-based candidates that could pose future competition [13] Financials and Valuation - NVO is trading at a premium to the industry, with a forward P/E of 22.23 compared to the industry's 15.64 [14] - 2024 earnings estimates increased from $3.07 to$3.24 per share over the past 60 days, while 2025 estimates decreased from $4.18 to$4.01 [19] - The company has a trailing 12-month return on equity of 86.32%, significantly higher than the industry's 31.88% [34] Production and Capacity Expansion - NVO's parent company, Novo Holdings, acquired Catalent to enhance semaglutide production capacity [17] - The Catalent deal is expected to significantly boost Ozempic and Wegovy production in 2025 [25] - The company is making substantial investments to expand production capacity to meet rising demand [9] Diversification and Pipeline - NVO is diversifying its portfolio by developing Mim8 for hemophilia A and Alhemo for haemophilia A/B with inhibitors [32] - The company is studying semaglutide for metabolic dysfunction-associated steatohepatitis [7] - NVO is developing novel obesity treatments to stay competitive in the US market [31]